> If the population of this country stopped growing and started shrinking, a lot of real estate would be freed up. Demand for housing in the densest cities would drop, and it would be cheaper to live.
Without a policy to disincentive it, couldn't large asset holders purchase freed up real estate and artificially control the supply?
Not profitably. Renting out apartments is profitable, but paying property tax and maintenance costs on a bunch of housing that you hold empty isn't. And to artificially control the supply the housing needs to be empty. (This is actually one way we know this isn't happening at a large scale right now: vacancies are at historic lows)
Buying up a bunch of real estate to drive up the price and sell for a profit also doesn't work. For the same reason that a pump-and-dump scheme needs other bag holders: when you start selling the price will drop too quickly
Exactly, this is point I was trying to make. Policy can have an effect on the market. It is more than just supply and demand like noduerme was suggesting. An example is London. There is a large number of empty housing owned by non-residents because they can avoid a lot of taxes and its a good place to park money. If there wasn't preferential treatment for non-UK residents then the housing market there would look a bit different.
Also buying up housing assets could be a long term strategy that would benefit the owners in ways short term would not (change of policy 10 years later, increased population because of migration laws, etc.)
The apartment vacancy rate in London is apparently only 3.4% [0] right now! That's not even the 4.5-6% rate that it takes to cause rents to stop growing. I would hardly consider that a large number of empty housing.
That data you provided is for London, Ontario, Canada. I was speaking about London, England, UK. That being said I looked up the official data and calculated around 3% for dwelling vacancy in London for 2020 [0]. Though, if look at individual boroughs one finds there is a high vacancy rate in certain areas [1] (based on the same data from [0]).
Without a policy to disincentive it, couldn't large asset holders purchase freed up real estate and artificially control the supply?